Price sensitive

Arnoldo Mondadori Editore has announced that, under the terms of Art. 70 para. 5 of the Consob Regulation n.11971/1999, the plan for the merger, by incorporation with Arnoldo Mondadori Editore S.p.A. of the wholly-owned subsidiary AME Editoriale Wellness S.r.l., previously Mondadori-Rodale S.r.l., is available for inspection at the company’s headquarters, at Borsa Italiana S.p.A. and in the Governance section of the company’s web site (www.gruppomondadori.it), along with an illustrative report and other documentation foreseen by Art. 2501 septies n.3) of the Civil Code.

As per Art. 2505 para. 2 of the Civil Code, resolutions regarding the merger by Arnoldo Mondadori Editore S.p.A. will be made, within the terms of the law, by the board of directors.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 2 and 5 August 2011, the company bought a total of 400,000 shares (corresponding to 0.162% of the company’s share capital) on the automated share market at an average price of € 2.12411 per share, for a total of € 849,645.30 in the context of the authorisation of the company’s AGM, held on 21 April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.
The details of the operations, as conducted daily, are indicated below:

date N° of shares bought Weighted average price 02/08/2011 90,000 2.15207 03/08/2011 110,000 2.16762 04/08/2011 110,000 2.09511 05/08/2011 90,000 2.07843

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 6,278,609 of the company’s shares. A further 4,517,486 shares are hold by the subsidiary Mondadori International S.p.A..
Consequently, as of today the total number of shares held now amounts to 10,796,095 (or 4.38% of the share capital). This figure refers to the share capital after the capital reduction, effected by the cancellation of 12,971,492 treasury shares, carried out in line with the shareholders’ resolution of 21 April 2011, previously communicated to the market.
***
It should be noted that the Shareholders on 21 April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to the shares already held, either directly or indirectly on the date of the authorisation issued by the AGM, bringing the total up to the limit of 15% of the share capital on the date of the shareholders’ meeting and 10.52% after the aforementioned capital reduction.
The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.
In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree 58/1998 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.
It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. has announced that the report for the period to 30 June 2011 is available, together with the independent auditor’s report, at the company’s corporate offices and Borsa Italiana S.p.A.
The documents are also available on the Mondadori web site www.gruppomondadori.it (in the “Investor Relations” section).

Arnoldo Mondadori Editore S.p.A. today announced that, in compliance with art. 2445 para. 3 of the Civil Code, it had enacted the resolution of the extraordinary shareholders’ meeting, held on 21 April 2011 (deposited with the Company Records Office on 3 May 2011), regarding the reduction of the company’s share capital from €67,451,756.32 to €64,079,168.40 through the cancellation of 12,971,492 shares held in treasury stock with a par value of €0.26 each.
Following this reduction, the share capital of di Arnoldo Mondadori Editore S.p.A. now amounts to €64,079,168.40, divided into 246,458.340 ordinary shares with a par value of €0.26 each.

In attachment: “Model for the communication of changes in share capital” (Model 1) pursuant to Art. IA.2.3.4 of the “Instructions for the Regulation of Organised Markets Managed by Borsa Italiana S.p.A.”.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first half of the year to 30th June 2011, as presented by the Group’s deputy chairman and chief executive, Maurizio Costa.

THE MARKET SCENARIO
The latter months of the period saw a confirmation of economic instability in Italy resulting from a further slowdown in industrial production and consumer spending, as well as an increase in unemployment.
With regard to the sectors of reference for the Mondadori Group:
– the book market in Italy was characterised by the absence of bestsellers but nevertheless remained essentially stable compared with the previous year;
– the economic crisis had a clear impact on magazine circulation which in the first six months, both in Italy and France, was down;
– a climate of great uncertainty in both countries; with marked volatility in the Italian advertising market, with some months going well and others less so, while in France the growth trend that had persisted for some time was interrupted in the month of May.

GROUP PERFORMANCE FOR THE PERIOD TO 30 JUNE 2011
The first half results of the Mondadori Group in particular show:
– a slight increase in revenues, thanks to the resilience of all the businesses and the contribution of the digital activities under development;
– an improvement in operating profitability, essentially due to the improved performance of the core business: profitability was up both for magazines and books thanks to sustained revenues and the positive effects of cost cutting measures;
– an acceleration in the development of digital activities, for the web sites of the main titles, applications, the development and loyalty building of communities, online book sales (both print and digital) and the launch of new businesses;
– a capital gain from the sale to the Hearst Group of the company’s 50% stake in the company that publishes Cosmopolitan.

Consolidated revenues came to €741.4 million, an increase of 2% on the €726.8 million for the first half of 2010. A substantial part of the increase in revenues (+€14.6 million) was the result of an increase in digital activities.

Consolidated gross operating profit amounted to €59 million, up by 8.1% on the €54.6 million of the corresponding period of last year: excluding extraordinary items and investments for digital activities, gross operating profit would have been up by 8.6% on the same period of 2010.

Consolidated operating profit came to €47.9 million, a rise of 11.9% on the €42.8 million to 30 June 2010, with amortizations and depreciations on tangible assets of €11.1 million (€11.8 million in 1H 2010).

Consolidated pre-tax profit amounted to €37.5 million, a 21.8% increase on the €30.8 million for the same period of last year, thanks to a reduction of tax charges resulting from efforts made in the last 12 months on the company’s debt structure.

Consolidated net profit came to €22.7 million, an increase of 50.3% compared with the €15.1 million for the same period of the previous year.

In the first six months of 2011 gross cash flow amounted to €33.8 million, compared with €26.9 million in 1H 2010.

The Group’s net financial position was essentially in line with the first half of last year (-€399.2 million on 30 June 2011 compared with -€393 million on 30 June 2010) despite the payment of €40.3 million in dividends for the 2010 financial year.

Information concerning personnel
On 30 June 2011 permanent and temporary contract staff employed by the companies of the Group amounted to 3,701, a reduction of 56 compared with the same period of last year.
On a like-for-like basis, excluding development activities, the reduction compared with the first half of 2010 would be 110. Of particular note:
– the consolidation of AME Wellness Editoriale S.r.l. (ex Mondadori Rodale S.r.l.) from 30 June 2011;
– the development of new activities in the digital area and the creation of Glaming S.r.l., as well as the activation, inside other companies of the Group, of seasonal activities in the educational publishing area and the management of museum sites.
The organisational impact of these elements, to which the efficiency gains made by Mondadori France should be added, show that rationalisation efforts and the use of early retirement incentives are proceeding in line with the company’s plans and the agreements reached.

Personnel costs to 30 June 2011 amounted to €137.7 million, compared with €134.3 million for the first half of 2010. On a comparable basis – i.e. excluding the staffing costs for the digital area and eliminating the contribution of Mondolibri S.p.A., consolidated for only two months of 2010 – the overall cost would be down by 1.3% compared with 30 June 2010. On a like-for-like basis, compared with the first half of 2009 there was a reduction of 8.7%.

THE BUSINESS AREAS
· BOOKS
Book revenues in the first half of 2011 amounted to €166.9 million, -0.6% on the €168 million of the same period of last year. This was the result in a fall in revenues from third-party distribution, with sales in the art, exhibitions and educational sectors essentially stable.

Trade book sales, the area’s main source of revenues. Were up by 1.6%, confirming the Mondadori Group’s leadership in the sector with a market share of 26.4% (source: Nielsen, first half).
Edizioni Mondadori recorded first half revenues of €60.1 million, an increase of 8.3% compared with the same period of 2010. The validity of the Mondadori offer was also confirmed by the titles that were nominated for the most prestigious Italian literary prizes, including Di Fama e di sventura by Federica Manzon, a finalist for the Campiello prize; Ternitti by Mario Desiati, short-listed for the Strega prize; and La fine del mondo storto by Mauro Corona winner of the Bancarella prize.
In Italian fiction, there was continued success for Nessuno si salva da solo by Margaret Mazzantini which has sold some 300,000 copies in the last three months. In foreign fiction the outstanding titles in the period have been Le luci di settembre by Carlos Ruiz Zafón (190,000 copies) and Autopsia virtuale, the new thriller by Patricia Cornwell (135,000 copies).
The launch in March of the new brand NumeriPrimi°, an imprint offering quality paperbacks, resulted in sales of over a million copies in just four months.
Among the Group’s other publishing houses, of particular note was the performance of Einaudi that ended the first half with revenues of €25.7 million, an increase of 8%.

In the digital market, since the beginning of the year the Group has published 2,300 trade e-book titles at the same time as the printed versions (600 more than in the first half of 2010), including a variety of products published as applications.

There are also high expectations for the editorial programme for the second half with the publication of new titles by Fabio Volo, John Grisham, Sophie Kinsella and Alessandro D’Avenia.

· MAGAZINES ITALY
In a market that in the first six months showed none of the expected signs of recovery in the Italian and international publishing sector, the revenues of Mondadori’s Magazine Italy area amounted to €247.8 million, essentially in line (-0.9%) with the €250 million of the same period of 2010.

This result is largely attributable to the fall in circulation revenues (-4.3%), while advertising was up by 1.8%, in a market that recorded a fall of 1.4%, sustained by the good performance of Mondadori titles (+0.5%), strong efforts by the sales network and numerous and innovative initiatives. On the internet front, there was an excellent performance in sales by the non-consolidated arm Mediamond (+30%).

In terms of circulation, Mondadori titles performed better than the market, which lost 5.6% in copies – despite the progressive decline in subscription copies (-14%), following the big increase in postal charges. Revenues for add-on sales in the period were stable.

Over the coming months the programme of re-launches of certain titles in the portfolio will continue, taking the total number to 10 during the year, following the launch of Panorama Icon, the re-design of Donna Moderna Panoramauto, Casaviva and Ciak, in the first half of 2011.

During the period, the web sites of Mondadori titles saw an increase in revenues of 18%, in particular Donnamoderna.com (+30%), which was re-launched with a new version in May, Panorama.it (+57%) and Grazia.it (+22%), completely renovated in April.
In terms of traffic, Donnamoderna.com recorded an excellent performance with 70 million page views (+80% on the first half of 2010) and 4 million unique users (+35% compared with the same period of last year).

· MAGAZINES FRANCE
The revenues of Mondadori France in the first half of 2011 amounted to €172.4 million, an increase of 2.4% on the €168.4 million for the same period of the previous year.

On the advertising side, Mondadori France recorded growth of 4.7% compared with the same period of last year, in a market that was up by 2.5% (source: Kantar Media, in terms of value).
This result is large attributable to the performance of Grazia, which saw advertising revenues grow by 53%, and the positive performance of the titles in the “Sciences” area.
In particular Grazia, with an average circulation of 180,000 copies in the period, confirmed its position as the most successful weekly in its segment and in second place in terms of the total number of advertising pages in the entire French market.
In fact, upscale women’s titles now account for 32.9% of the company’s total advertising revenues, up from 26% in the first half of 2010.

In terms of circulation revenues (69% of the total), Mondadori France recorded growth of 2.1% thanks to the focus on a portfolio of mass-circulation titles and constant attention to product quality and innovation. Of not during the period was the launch of the pocket version of Grazia and the growth, compared with the first half of 2010, of women’s titles, in particular Top Santé (+10.2%), Biba (+8.8%) Modes & Travaux (+7.3%), as well as Science & Vie (+2.9%).

International activities
Thanks to a recovery in the advertising market, in the first half of 2011 the positive trend first recorded in the first quarter continued, resulting in an increase of 45% in licensing revenues.
Compared with the first quarter, there was a confirmation of the performance of all editions, especially weeklies, that drive the revenues from advertising services for Italian clients for all the titles in the network.
In June, a new edition of Casaviva was launched in Ukraine, while in the second half a new edition of Interni will be published in Russia.
There was also a marked improvement in the contribution of the joint ventures in Russia and China compared with last year, and significantly better than the forecast, in particular as a result of a hike in advertising sales.
The Attica subsidiary continued to feel the impact of the ongoing financial crisis in Greece and saw its advertising revenues fall by 25% in Greece and 15% in the Balkans. Serbia meanwhile bucked the trend, with an increase of 8%. Thanks to the restructuring of the company, the detailed re-negotiation of all supply contracts and the excellent performance of the Group’s two radio stations, the final result was in line with last year.

· ADVERTISING
Total advertising investments in the first half of 2011 were affected by a slowdown of 2.8% in the first five months of the year (source: Nielsen, May).
This is mainly due to a decline in two fundamental sectors, food and telecoms, which were both down by 9.4%. There was substantial growth in the internet (+15.6%); a slight improvement compared with recent months for TV (-2.3%) and magazines (-1.4%), while newspapers continued to fall (-4%) and radio saw a sudden and marked slump (-8.4%).

Mondadori Pubblicità ended the first six months with total revenues of €117.5 million, a slight fall (-2%) compared with the €119.9 million of the first half of 2010; this result was due to the positive performance of sale fro Mondadori titles (+0.5%) and R101, while sales for third-party publishers were in decline.
Regarding the performance in the Mondadori area:
– there was a slight increase for weeklies compared with the first half of 2010, thanks to the positive performance of Grazia, Tu Style and Donna Moderna; and a slight fall for monthlies (-1.4%), despite a good performance in the interiors/furniture sector;
– despite the difficult market, R101 recorded a positive performance following the reorganisation of the network, with an increase in sales of 2.7% in May and 6.9% in June;
– in the internet, where sales are managed by the joint venture Mediamond, there was significant growth in the first half, thanks to the positive performance of Mondadori’s women’s portals and the news area of Mediaset with Tg.com and Sportmediaset.it. There was alos an expansion of the area with the acquisition of advertising sales contracts for Meteo.it and Giornale.it.

· DIRECT and RETAIL
Total first half 2011 revenues in the Direct and Retail areas came to €123.1 million, an increase of 13% on the €108.9 million in the first half of last year, thanks to the contribution of Mondolibri, consolidated in May 2010, and the performance of the franchise network.

Revenues from the Direct area, which include the activities of Cemit Interactive Media and the mail order sales of Mondolibri, saw growth of more than 26%, also due to the change in the area of consolidation.

In Retail, in the first half of the year the Mondadori chain of stores saw sales rise by 6.8% compared with the same period of the previous year, thanks to the contribution of the Mondolibri outlets (€10.5 million in 1H 2011, compared with €1.9 million in the two months of 2010) and new affiliations in the Mondadori Franchising network (+8% compared with the same period of 2010) which offset the fall in revenues from Mondadori Retail’s own stores, due to the closure of two shops in Rome, as already announced, in the second half of 2010.

· RADIO
As mentioned, there was a sharp downturn in revenues in the radio market in the first five months of 2011 (-8.4%), and a fall of 12% in the last three months (source: FCP Assoradio).
In this difficult context, the performance of R101 clearly bucked the trend, with net revenues of €8.2 million, an increase of 7.9% on the €7.6 million from the same period of last year.

This result was due to the excellent performance, following the reorganisation of the sales network and the alignment of the share of radio by the advertising sales company compared with the Group’s other businesses, made possible by a reduction in the cost of advertising sales for the radio itself.

· DIGITAL
In the first half of 2011 the Digital area of the Mondadori Group generated from direct activities total revenues of €8.8 million, while the development of indirect digital activities for other business sectors (e-books, online book clubs, internet sites, subscriptions and digital advertising) generated revenues of €14.2 million; consequently, the new Digital area generated a total of €23 million, compared with €13 million in the first six months of 2010, despite the delay in the launch of gaming activities.

Of particular not among such activities were:
– www.bol.it, which had 900,000 unique users, up by 70% compared with the same period of last year and 17% compared with the month of May 2011, and the web site www.easyshop.it, with more than 100,000 unique users;
– applications and services for mobile phones, that continue to make an important contribution to revenue and margin growth. In the apps area, after the launch of Virtual History Roma, a series of other cultural apps were developed (The Last Supper and others in collaboration with the Books area including Diabolik and Alexandros) and news (Epoca/il Papa Santo, La Patria bene o male).
With regard to Value Added Services, there was an increase in revenues of over 10% compared with 2010, thanks to the expansion of the offer and services launched with the leading telecoms operators;
– the CRM project, which aims to aggregate the Group’s various customer databases with a view to making increasingly targeted offers to customers, is in line with the programme which will enable the company to make its first moves and to develop an adequate process of innovation in the area of customer relations during the last quarter of 2011;
– during the second quarter the company also created Glaming, a company owned 70% by Arnoldo Mondadori Editore SpA and 30% by Fun Gaming, for the management of distance public gaming (an activity that is regulated by a government authority, in Italy the Amministrazione Autonoma dei Monopoli di Stato, or AAMS). Mondadori, which at the end of June was included in a provisional list of applicants, expects to be awarded a licence in July and to begin activities by the end of the year.

FORECAST FOR THE FULL YEAR
In terms of economic growth and employment, the situation in Italy, and more generally in Europe, shows little sign of improvement. There have recently been great concerns about public finances in the whole of the Eurozone, with inevitable effects on social security and fiscal policies and, as a result, on savings and household expenditure.
The climate of great socio-economic uncertainty has also had a direct impact on investments.

Given the prevailing context, with reference markets in decline, the Mondadori Group’s results for the first half of 2011 are particularly significant; where resilience in the core business and the ongoing attention to cost reductions have enabled the company to record an improved level of operating profit for the sixth consecutive quarter.

Over the coming months the commitment to the more traditional businesses will be accompanied by a greater commitment to the digital sector, with the acceleration of the offer of products and digital services and the building of customer loyalty related to the Group’s brands and communities.

Conditioned by exogenous and transnational factors, it has never been more difficult than now to make forecasts about growth.
But in spite of all these considerations, the determined and focused management of the core business and the development of new opportunities is expected to enable the Mondadori Group, in the absence of unexpected phenomena, to record an improvement in profitability also for the full year, despite ongoing investments for the development of its new digital activities.

§

The executive responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, as per art. 2, 154 bis of the Single Finance Text, the accounting information contained in this release corresponds to that contained in the company’s formal accounts.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 18 and 22 July 2011, the company bought a total of 459,000 shares (corresponding to 0.1769% of the company’s share capital) on the automated share market at an average price of €2.32612 per share, for a total of €1,067,691.86, in the context of the authorisation of the company’s AGM, held on 21st April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

date N° of shares bought Weighted average price 18/07/2011 105,000 2.26996 19/07/2011 100,000 2.30395 20/07/2011 125,000 2.32025 21/07/2011 60,000 2.37453 22/07/2011 69,000 2.41229

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 18,850,101 of the company’s shares (or 7,2660% of the share capital). A further 4,517,486 shares are hold by the subsidiary Mondadori Internarional S.A.
Consequently, as of today the total number of shares held now amounts to 23,367,587 (or 9.0073% of the share capital).

***

It should be noted that the Shareholders on 21st April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to a total of 22,367,587 shares, already held, either directly or indirectly on the date of the authorisation issued by the AGM, permitting the attainment of the 15% limit on the existing share capital established by the Shareholders.
The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.
In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.
It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 11 and 15 July 2011, the company bought a total of 541,000 shares (corresponding to 0.2085% of the company’s share capital) on the automated share market at an average price of €2.28219 per share, for a total of €1,234,666.71, in the context of the authorisation of the company’s AGM, held on 21st April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

date N° of shares bought Weighted average price 11/07/2011 110,000 2.22902 12/07/2011 106,000 2.24066 13/07/2011 80,000 2.32952 14/07/2011 120,000 2.30891 15/07/2011 125,000 2.30827

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 18,391,101 of the company’s shares (or 7.0890% of the share capital). A further 4,517,486 shares are hold by the subsidiary Mondadori Internarional S.A.
Consequently, as of today the total number of shares held now amounts to 22,908,587 (or 8.8304% of the share capital).

***

It should be noted that the Shareholders on 21st April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to a total of 22,367,587 shares, already held, either directly or indirectly on the date of the authorisation issued by the AGM, permitting the attainment of the 15% limit on the existing share capital established by the Shareholders.
The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first three months of the year to 31st March 2011, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario
At the macro-economic level, there were no particular signs in the first three months of 2011 of a change in the underlying trends seen in the closing months of last year. Production gains were modest, there was still no real signs of a recovery in consumer spending and unemployment levels remained high.

GROUP PERFORAMCE IN THE FIRST QUARTER OF 2011
In this market context, the Mondadori Group produced results that were up on the figures for the first quarter of last year, with an increase in revenues of 3.2%, thanks to business performances that were generally above the respective markets of reference, as well as the consolidation of Mondolibri.
In terms of profitability, there was a 2.8% increase in gross operating profit, achieved despite increase investments for the development of the international magazine network and in new digital activities. A significant contribution was also made in the period by the plan for the reduction of operating costs, which, three quarters ahead of schedule, has already reach its target saving of €170 million, on a like-for-like basis, for the three-year period 2009-2011.

Consolidated revenues in the first quarter of 2011 amounted to €355.6 million, a rise of 3.2% on the €344.7 million of the first three months of 2010.

Consolidated gross operating profit came to €21.8 million, an increase of 2.8% on the €21.2 million of the previous year, despite, as indicated, increased investments for development.

Consolidated operating profit amounted to €16.3 million, up by 3.8% on the €15.7 million of the first quarter of 2010, in both quarters amortizations and depreciations of tangible and intangible assets amounted to €5.5 million.

Consolidated profit before taxation came to €10.9 million, a 26.7% rise on the €8.6 million of Q1 2010, thanks to a reduction in financial charges resulting form a lower cost of money following the debt restructuring completed at the end of 2010, and a lower level of average indebtedness.

Consolidated net profit came to €5 million, more than double the €2.4 million of the same period of the previous year.

Gross cash flow in the first three months amounted to €10.5 million, compared with €7.9 million in 2010.

The Group’s net financial position at 31 March 2011 stood at -€320.7 million, compared with -€342.4 million at the end of 2010, an improvement over the quarter of €21.7 million.
In the period from March 2008 to March 2011, the total reductions has been of around €250 million.

Information regarding personnel
As of 31 March 2011, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,674, compared with 3,852 in March 2010 (3,649 in December 2010).

The trend in workforce numbers clearly shows the results achieved over the last 12 months following the completion of most of the restructuring plan launched in 2010 which has resulted, as of today and also considering the consolidation of Mondolibri last year, an overall reduction in the headcount of 178 (or 4.6% of the total workforce).
Compared with 31.12.2010 the change in the headcount (+0.6%) is the result, on the one hand, of reductions deriving from the reorganisation and restructuring of traditional businesses, which is still ongoing, and, on the other, an increase for the Group’s development in the web and digital areas.

In France a reorganisation plan for TV guides was recently presented that will result in a reduction of the headcount of 37, a response to the sharp fall in revenues from this sector.
In Italy, meanwhile, it should be noted that the figures presented in the report do not include the effects of the renewal of national labour contracts in the publishing and trade and services sectors. The former is still being negotiated and the latter was redefined at the beginning of April.

RESULTS OF THE BUSINESS AREAS
· BOOKS
Revenues in the Books area in the first quarter amounted to €78 million, compared with €79.8 million in the same period of last year (-2.3%).
Trade books revenues, the area’s main revenue stream (accounting for around 78% of the total), grew by 0.5%. While total revenues were affected by shortfalls in the art and exhibitions segments (-16.9%) and distribution for third-party publishers (-9%), the education area was stable.

Of note during the period was the launch of “Numeri Primi”, a new brand in the quality paperback segment, the first 13 titles of which recorded sales of almost 800,000 copies through the bookshop and large-scale retail channels.
In the still embryonic ebook market, Mondadori expanded its offer with a catalogue that, as of 30 March 2011, included around 1,700 titles (compared with 1,500 at the end of 2010).

Nielsen figures for the first three months of 2011 confirm the Group’s leadership in the Trade books segment, with a market share of around 26.1%. Compared with 2010, the single publishing houses d Edizioni Mondadori, Sperling & Kupfer and Piemme were slightly down, while Einaudi grew.

· MAGAZINES ITALY
In the first quarter of the year Magazines Italy generated revenues of €122 million, a slight fall (-1.1%) compared with the €123.4 million of the first quarter of 2010.
The trend in revenues was the combined result of a fall in circulation (-5.8%) and an increase in advertising (+4.8%), supported, as well as by the efforts of the sales network and numerous new initiatives, also by an excellent performance by the international network and sales in the digital area. Meanwhile, revenues from add-ons were stable compared with the first quarter of 2010, with an improvement in margins.

Regarding circulation, Mondadori performed better than its market of reference performance (-7.5% to February, internal figures), containing the fall in the first quarter at 6.4% in terms of volume, mainly the result of the reduction of promotional copies and the planned downsizing of the subscription channel (-11%), which was begun last year to counteract significant increase in postal charges.
Among the most significant features of the first quarter were the relaunch of Casaviva and the redesign of Ciak.

Regarding the web sites of Mondadori titles, advertising sales in the first quarter increased by more than 20% compared with the same period of 2010: particularly encouraging was www.donnamoderna.com; while also www.grazia.it and www.panorama.it performed well.
Online metrics for the titles were also very positive during the period, with donnamoderna.com and the sites of its network once again standing out with an increase in unique visitors of more than 26% (around 4 million), while there was a 25% increase in page views (around 52 million) and a 57% jump in the unique visitors for the new Grazia site.

· MAGAZINES FRANCE
Mondadori France ended the first quarter of 2011 with revenues of €82.6 million, an increase of 1.9% on the €81.1 million of the corresponding period of 2010.

The advertising market for French consumer magazines showed a volume increase in the first quarter of 2011 of 4% (Source: Kantar Media): in the same period Mondadori France recorded an excellent performance with an increase of 13% in terms of volume, raising its market share by 0.8%.

In terms of value, the advertising sales of Mondadori France saw a sharp upturn compared with the same period of the previous year (+10.2%).
This excellent result was due – in addition to the generally favourable performance of women’s “haut de gamme” titles in the portfolio, which account for 32.5% of total advertising revenues (24.6% in the first quarter of 2010) – also to a significant increase in advertising in Grazia (+68%), which with 539 pages in the first quarter is now in second place in the consumer magazine market. Also performing well in the period were Sciences, Closer and l’Ami des Jardins.

Circulation revenues, which combine newsstand sales and subscriptions, make up 71% of the total and were essentially stable at the consolidated level (+0.5%): this performance is even more positive if account is taken of the ongoing decline in the market of reference.
During the first quarter Mondadori France launched three new formulas for Science & Vie, Auto Plus and Le Film Français and a new quarterly, Guerre & Histoire. Since the end of March Grazia has also been available in a pocket-sized version at a price of €1.50, while the price of the traditional format has risen to €1.70.

International activities
In the first quarter of 2011 a recovery in the advertising market in the countries of the Group’s international network led to an increase of over 50% in licensing revenues.
The positive performance of all editions, in particular of weeklies, also helped to drive revenues from advertising sales to Italian clients for all of the titles. There was also further growth in the number of Mondadori Group editions published under licence and June will see the publication of Casaviva Ukraine; while in October, the Russian edition of Interni will be published with a new partner, Artcom Media.
There was also a decided improvement compared with last year in the results of the 50-50 joint ventures in Russia and China, thanks to a marked increase in advertising sales, while the Attica subsidiary continued in the period to be affected by the ongoing financial crisis that has resulted in a marked downturn in advertising revenues.

· ADVERTISING
Indications in Italy in the first quarter of 2001 show a slight fall in advertising investments (Nielsen figures on total ad spending show a fall of 2%). In particular, the biggest slide came, somewhat unexpectedly, from newspapers (-8.7%), which had a negative knock-on effect on magazines (-4.3%), which felt the impact of a slump in specialised titles.
Also of note was the essential stability of radio and TV, the latter showing a slight decline (-0.5%), while in the first months of the year the internet was the only medium that showed a significantly different trend (+15.5%).

Mondadori Pubblicità ended the first quarter with total revenues of €49.5 million, a slight improvement (+0.2%) on the €49.4 million of Q1 2010.
For magazines, the titles published by Mondadori saw an increase of 3%, attributable mainly to weeklies (+5.6%), in particular positive performances by Grazia (+18%), Donna Moderna (+4%), Tu Style (+46.4%) and Panorama (including supplements: +3.2%).
Among the monthlies, which in general continued to suffer in the early months of the year, there was however an excellent performance by Starbene (+23.4%) while also Flair (+4.7%) performed well.
Gross advertising revenues for R101 were in line with Q1 2010.

· DIGITAL
As is well known, at the end of 2010 the company created a business area for Digital, focused on the development of a range of activities in the area of new technology. From this quarter account will also be given in business and economic terms of a digital segment which, as a result of the matrix organisation adopted by the Mondadori Group at the beginning of 2011, also operates in support of other business units.
Consequently, while the digital segment records the performance of directly managed activities (a total of €4.4 million in the period), such as e-commerce (bol.it and easyshop.it), gaming, applications and CRM, other activities (e-books, online book clubs, web sites, subscriptions and digital advertising) are booked to the Magazines Italy and Books business areas (for a further €7.6 million), for a total of €12 million.
Direct revenues generated by the Digital area are largely from the www.bol.it site which recorded excellent results, also in terms of traffic, compared with the first quarter of 2010, with 835,000 unique visitors (+14%) and more than 6.3 million page views; the remainder of revenues derive from services and applications linked to mobile phones and services for the management of internet sites.
In addition, from the second half of the year, it is expected that a contribution will be made by the e-commerce activities of the website www.easyshop.it – with which, at the end of March, Mondadori began sales of products from leading brands in fashion, furniture, design and technology – and online games, for which the company has applied for a government licence.
Another important activity in the digital area is the elaboration and implementation of an adequate system of customer relationship management (CRM), aimed at sharing the Group’s client databases in such a ways as to make them even more exploitable.

· DIRECT and RETAIL
Total revenues generated by the Direct and Retail area in the first quarter of 2011 amounted to €61.5 million, an increase of 24.2% on the €49.5 million to 30 March 2011, also as a result of the consolidation of Mondolibri SpA from May 2010, net of which there would have been a fall, mainly due to the closure of two shops in the second half of last year.
In the network of sales outlets there was a further expansion in the number of franchise outlets, which now total 487, recording an increase in sales of around 5%. The Multicenter channel saw agreements reached with leading producers for the development of the so-called corner shop (in-store concessions).
It should also be noted that the board of directors of Mondadori Retail, Mondadori Franchising and Mondolibri approved a project to merge the companies that will, from 1 July 2011, trade under one name with the aim of pursuing greater management efficiency and facilitating the development of internal synergies.

· RADIO
R101 generated net revenues of €3.3 million (€3.1 million in Q1 2010) on gross advertising revenues of €4.4 million, in line with the previous year.
The radio market in the first quarter of 2011 saw a fall in revenues of 5% compared with the same period of the previous year (Source: FCP Assoradio).
On the ratings front, the publication of national Audiradio figures remains suspended.

EXPECTATIONS FOR THE FULL YEAR
The first three months of the year provided no clear signals of any possible short-term changes in the general economic scenario or in the markets of reference for the Mondadori Group, where there continues to be a generalised decline in business volumes.
Mondadori has, nevertheless, and for the fifth consecutive quarter, presented improved results, thanks to the close attention paid to product quality, the defence of the brands and the ongoing optimisation of the operational structure.
To all of this, the Mondadori Group has added an growing commitment to the development of its digital activities, with a view to exploiting the potential of its product portfolio and communities and to respond to new demands from consumers, also deriving from technological changes.
Assuming no particular or unexpected changes in the markets of reference, over the coming quarters Mondadori expects to confirm the improvements recorded from the beginning of 2010, which will allow the Group to maintain levels of operating profitability, despite continued investments for the development of new digital activities.

§

The executive responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, as per art. 2, 154 bis of the Single Finance Text, the accounting information contained in this release corresponds to that contained in the company’s formal accounts.

§

The report for the first quarter of 2011 will be available at the company’s corporate headquarters, Borsa Italiana SpA and on the web site www.gruppomondadori.it (Investor relations section) from today

Also available from today, at the company’s corporate headquarters, Borsa Italiana SpA and on the web site www.gruppomondadori.it (Corporate section), will be the minutes of the Ordinary and Extraordinary Meeting of the Shareholders held on 21 April 2011.

The Annual General Meeting of the Shareholders of Arnoldo Mondadori Editore S.p.A., which met today under the Chairmanship of Marina Berlusconi, approved the company’s Annual Report for the year ended 31 December 2010 and deliberated, in line with a proposal resolved by the board of directors on 21 March and previously communicated to the market, to distribute a dividend, net of taxation, of €0.17 for each ordinary share (net of treasury stock) in circulation of the date appointed for coupon detachment.
Dividends will be payable from 26 May 2011 (coupon detachment from 23 May 2011).

In his report to the shareholders, the deputy chairman and chief executive Maurizio Costa outlined the highlights of the group’s performance during 2010, already announced on 21 March.

RENEWAL OF AUTHORISATION FOR THE BUY-BACK AND UTILISATION OF COMPANY SHARES
Following the expiry of the term fixed for the authorisation issued at the Annual General Meeting of 27 April 2010, the shareholders renewed authorisation to effect share buy-backs, up to the 15% of the share capital, the equivalent of 38,914,474 ordinary shares.
By taking account of the shares previously in the portfolio, the total number of shares comprising treasury stock is now 22,367,587 (8,62% of the share capital), of which. 17,850,101 are held directly in the Arnoldo Mondadori Editore S.p.A. portfolio and 4,517,486 are held by the subsidiary Mondadori International S.A., the authorisation allows for the purchase of an additional maximum of 16,546,887 shares.
It should be noted that, with regard to the authorisation of 27 April 2010, the company made no buy backs, given that the market conditions were not in line with the authorisation itself.
The shareholders also authorised, as per Art. 2357 of the Civil Code, the use of shares involved in such buy back operations or already in the company’s portfolio.

In line with the provisions of art. 144 bis of Consob regulation 11971/1999, what follows is an outline of the buy-back programme authorised by the Shareholders:

• Underlying motivation

The renewal of authorisation for the buy-back and utilisation of company shares is aimed at maintaining the legal conditions for eventual further buy-back plans and, as a result, the possibility of taking advantage of investment opportunities or other treasury stock operations, giving to the board of directors the specific faculties to:
– use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the shareholders;
– use company shares, either bought or in the portfolio, for the exercise of rights, including conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;
– use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;
– take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity.

• Duration

Until the approval of the 2011 Annual Report.

• Cap on the number of shares that may be bought

In line with the expiring authorisation, the renewal concerns the possible acquisition of an additional 16,546,887 ordinary shares which, taking account of the shares already either directly or indirectly held in the portfolio, as outlined above, allows for the purchase of up to 15% of the share capital.
Following the cancellation of 12,971,492 shares, and the consequent reduction of the capital, as resolved by the Shareholders in extraordinary session, the authorisation will permit the buy-back of up to a total of 10.52% of the share capital.

• Method of acquisition and the price range

Buy backs would be effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.
The corresponding minimum and maximum price of sale will therefore be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.
In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2003, in particular:
– the company will not buy shares at a price greater that the highest price of the last independent operation and the price of the highest current independent offer on the regulated market where the acquisition is made.
– in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.
Any operations that are effected will be communicated to the market as per the terms of art. 87bis, of Consob regulation 11971/1999.

CANCELLATION OF PART OF THE TREASURY STOCK HELD AND CORRESPONDING TO 5% OF THE SHARE CAPITAL
As indicated above, Arnoldo Mondadori Editore S.p.A. directly holds 17,850,101 company shares, equivalent to 6.88% of the share capital and acquired at an average price of around €6.1697 per share.

The Shareholders, meeting in extraordinary session, approved a proposal for the cancellation of 12,971,492 shares, with a nominal value of €0.26 per share, and corresponding to 5% of the share capital, while keeping in the portfolio, also to service stock option plans, 4,878,609 shares, in addition to the 4,517,486 held by Mondadori International.

The proposal to cancel a part of the shares held as treasury stock is explained by the fact that, in recent years, there have not been opportunities to use such stock as foreseen by the authorisations made by the shareholders, such as share swaps or conversions in financial instruments.

Following the cancellation, and the consequent reduction in the number of shares making up the share capital, would – while maintaining the necessary solidity to support future growth objectives – result in the optimisation of the company’s capital structure and have a positive impact in terms of increasing both earnings per share and dividend per share.

In terms of the impact on the company’s accounts, the “treasury stock”, in compliance with international accounting principles booked as a reduction in net assets, would be reduced by around €80,030,000, against a reduction in the share capital of a nominal €3,372,587.92 – corresponding to 12,971,492 shares with a cancelled nominal value of €0.26 – and a reduction of the “share premium reserve” of around €76,658,000.
The reduction in the share capital approved by the Shareholders will become effective, subject to no objections being submitted, only after a period of ninety days from the registration of the resolution, as foreseen by article 2445 of the Italian Civil Code.

As part of the development strategy of the Group’s Digital area, Arnoldo Mondadori Editore S.p.A. today announced that it has reached an agreement with Fun Gaming S.r.l. (owned by the entrepreneur Marco Bassetti) to establish a new company, 70% of which will be held by Mondadori and 30% by Fun Gaming.

The business of the NewCo – which will have an initial capitalization of €1.2 million – is the provision of an online games offer consistent with the targets and communities of the Mondadori Group’s editorial portfolio.

The start up of these new activities is subordinate to the granting of a public gaming licence by Amministrazione Autonoma dei Monopoli di Stato (the relevant Italian authorities) in compliance with the public bid announced in the Official Journal of the European Union of 10 March 2011 S 48-079188.